Theoretical concepts of Risk Management
Write 14 pages with APA style on Theoretical concepts of Risk Management in relation to projects. Thus, the study is focused on presenting a view on risk management. Objectives of the Study The risk management is necessary to be able to survive and plan the different problems and trials facing the organisations. The study is aimed to review the theoretical concepts of risk management specifically related to projects and practical implementation of strategies, plans and procedures. In addition, relevant corporate governance aspects of organisations are also included. Included in the specific topics covered in the research are the key challenges and applications in risk management, risks associated in research and development, risks in new product development, change management, technology transfer, and system integration of technology and the manpower. The needs for team working skills appropriate to risk management and the methods for formulating risk management strategies such as project risk models, migration, and contingency plans for appropriate action. Background of the Study Risk is the “combination of the probability of an event and the consequences which can either be beneficial or detrimental to the organisation or particular project. Due to the implications of the risks involved, the need to prepare for the risks is essential (Institute of Risk Management, 2002, p.2). Risks are inevitable in any type of activities, projects or organisational operation, thus, methods and techniques in recognising, resolving and working the risk as opportunities and chances of growth and excellence are being established (Loosemore and Raftery, 2006, p.1). One example of risks considered is in the safety field wherein the main concentration is the preparation for the negative risks to be able to ensure safety (Institute of Risk Management, 2002, p.2). The risks can affect different aspects of an organisation or project including physical, monetary, cultural, and social dimensions (Loosemore and Raftery, 2006, p.1). In addition to the complex effects of risk that serves as stimulus for action undertaken by organisations, risk can either serve as threat or opportunity which lead to essential benefits such as exploits more opportunities, enables trade-offs, increases the chances of success, sustains creative exploration and innovation, increases efficiency, and promotes motivation within teams (Hillson, 2009, p.9). There are different types of key risks that can affect risk management. These can be classified into the external and internal factors that are categorised as financial risks, strategic risks, operational risks and hazard risks. External financial risks are composed of factors related to interest rates, foreign exchange, and credit. External strategic risks include competition, customer or stakeholder changes, industry changes, customer or stakeholder demand, and M & A integration, which is also an internally driven risk. External operational risks include factor such as regulations, culture, board composition, and the recruitment and supply chain which are also considered as internally driven risk factors. Contracts, natural events, suppliers, and factors related to the environment are classified as the externally driven hazard risks.